RedFlow Limited Company Update June 2012 Chris Winter, CEO

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Cover images Main image

Part of Australia’s largest rooftop solar photovoltaic generation system, the 1.22 MW array at The University of Queensland.

RedFlow’s M-class prototype is being showcased there to show how large scale solar PV electricity

can be stored for use at night time.

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RedFlow M-class energy storage prototype on

demonstration at the UQ array

RedFlow Generation 2.0

zinc-bromine battery module (ZBM) 5kW / 10kWh

RedFlow R510 energy storage trial systems being assembled for shipping to

demonstration sites globally

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About RedFlow

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RedFlow (RFX) is an ASX listed, energy storage business How we generate and use energy is changing – especially electrical energy – and scalable energy storage solutions are a key part of the energy storage ecosystem of the future – RedFlow has developed a 10kWh zinc-bromine flow battery (ZBM) that is ready for trials and is

expected to become market-ready over the next 12 months

– RedFlow’s ZBM batteries address multiple market requirements – Storing electricity from intermittent renewable generation – Shifting demand from peak to off-peak periods

– RedFlow batteries have been successfully deployed at demonstrations sites in Australia, New

Zealand and the US

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The opportunity for RedFlow

This presents a huge opportunity for RedFlow’s ZBM battery which is suitable for a number of significant market opportunities presented by this change

RedFlow has attracted the attention of multi-national companies with global reach who are conducting field trials with a view to incorporating RedFlow ZBMs into their energy storage systems

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The way the world generates electricity, delivers it to customers, and uses it, is undergoing a period of fundamental change right now

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Lux Research estimates that 19% of $113.5 billion revenue opportunity by 2017 is available for zinc-bromide batteries

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Source: 1022261 Program 94, December 2010

RedFlow’s ZBM performance envelope

Estimate of US market for (grid-connected) electricity storage

$8.4 billion at 6 GW at $1400/kWh

$16.1 billion at 23 GW at $700/kWh

Market opportunities and competition

Source: Electric Power Research Institute 2010

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Our Core Product - RedFlow ZBM

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Zinc-bromine flowing electrolyte battery module

Delivers 10kWh of energy with a peak power rating of 5kW

Primarily made of plastic

Lightweight → low-cost compared to most competitors

Electrical performance:

– 100% capacity available on a daily basis → less CAPEX to user

– Charge and discharge over a few hours → matches applications

– 48 volts nominal → matches standard systems

– Round trip efficiency approx.70% (DC-DC) → good business case

– Tolerates up to 45ºC → supports a longer shelf life

– Target life of 1,500+ full cycles

Designed for use by System Integrators:

– Battery Management System (Modbus® compatible)

– Installation and Operating Manuals

400+ RedFlow ZBM’s manufactured since 2009

Example of a battery management system using a ZBM

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Demand for Storage Driven By: Additional Factors RedFlow Technology Demonstrators

The ‘Smart Grid’ is coming....

o A comprehensive modernisation of ageing electricity distribution networks

o Energy storage is a key element

‘Smart Grid’ and storage work together

Enables further cost savings for utilities – and cheaper power for retail customers

Located at end-users sites (residential or commercial)

60 RedFlow demonstration units with Ausgrid in Australia

Ausgrid is Australia’s largest electricity distributor (Sydney)

Part of Australia’s first Smart Grid trial with IBM as key supplier of the Smart Grid system

Peak demand for electricity is growing faster than average demand – higher use in a few short evening hours

Your electricity bill is

o Generation = 35% of bill

o Retailer = 15% of bill

o Distribution = 50% (wires etc.) where RedFlow's battery helps

That is partly why your electricity bill has gone up

Correctly used, electricity storage can be more cost effective in meeting evening peaks

RedFlow’s demonstration systems combining two ZBM modules have been trialled in rural networks in Queensland 20 kWh storage capacity

Electricity storage makes renewable generation much more practical

o Solar and wind generation are clean, but intermittent

o Storage makes renewable generation much more valuable

o With storage, solar and wind the RedFlow solution can supply reliable power

The cost of solar panels has fallen dramatically and continues to fall

Solar generation uptake is growing significantly worldwide

Nuclear power has now been deprioritised

Large scale solar PV systems require megawatt scale energy storage RedFlow has deployed its M-class technology demonstrator which comprises up to 36 ZBMs as a building block for MW systems

Off-grid power requirements are rising dramatically. A primary driver is the need to power mobile phone base stations. These are usually powered by diesel generators at very high cost

For off-grid sites like rural cellphone base stations (BTS) and remote area power sites, solar PV combined with storage can significantly cut diesel usage

70,000+ new off-grid BTS installations per year are being deployed at present

RedFlow is experienced in providing hybrid solar PV power stations with ZBM batteries for storage and diesel generation back-up

Over past 5 years specific opportunities have developed for RedFlow’s ZBM

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RedFlow ZBM Lead-acid batteries Lithium-ion batteries Sodium-sulphur batteries

Direct competitors a) ZBB (USA) b) Premium Power (USA) c) Rongke (CHN)

Maturity Developed in 2000’s RedFlow has a clear product roadmap for: a) Further improved

performance; and b) Cost reductions.

Very mature Mostly mature Mature

Key applications Stationary electricity storage Car starting Some energy storage

Laptop, cell-phones Electric vehicles

Large scale (1 MW) stationary energy storage

Issues when applied to heavy-duty electricity storage

Ideal application: High energy density Suit hard work of full 100%

cycling

Short life if fully discharged or not treated carefully

Acid and lead

Multiple small cells Favours high power rather than

high energy applications

High temperature Need continuous operation Long delivery time

Cost Significant trend downward: RedFlow has commenced

outsourcing for mass-scale production

Market leading: Little scope to reduce costs Application disadvantages

High cost: Mature product, less scope for

cost improvements

Moderate : Only suits large scale

Best market niche

High energy, daily cycling applications Time shifting Enabling renewable

generation

Small, high cost applications Frequency stabilisation (high power, short duration)

Large scale applications (+ 1 MW, continuous duty)

RedFlow ZBM versus competing battery technologies (for stationary electricity storage)

No one battery suits all applications. Each type has merit in a particular market application. There are 62 battery types globally

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Demonstration installations

Australia

Largest urban distribution utility (Ausgrid, 60 ZBMs)

Second largest rural distribution utility (Ergon Energy, 30 for initial completed trail and 3 ZBMs for ongoing trial)

State Government of Victoria (20 ZBMs completed demo)

The University of Queensland (24 ZBMs)

USA

Sandia National Labs (2 ZBMs)

Trial systems deployed with four other potential US partners (4 ZBMs)

Asia

3 ZBMs in Singapore

Ownership

Widely held, approx 1,300 shareholders (largest at 15%)

Listed in Australia (ASX:RFX)

52 staff

RedFlow Locations

San Francisco (Business Development manager)

Florida (US sales rep)

Tucson (US technical support)

Singapore (commercial production being established)

Brisbane, Australia (IP development & prototyping)

What we make

Packaged flowing electrolyte batteries

Zinc bromine battery module (ZBMs)

5 kW peak and 10 kWh

All plastic construction

Light

400+ ZBMs manufactured since 2009

Key partnerships developing

• Major German industrial electrical conglomerate

• Substantial US military contractor

• Singapore Technologies

• PowerCo (NZ)

Key suppliers

RedFlow corporate overview

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Strategic review conducted in April 2012

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The strategic review confirmed:

1. Significant market opportunity exists in MW-scale systems globally in addition to already identified kW-scale opportunities

2. Large commercial orders are dependent on successful demonstrations at larger scale with longer lead times than expected

3. Lower volumes through the demonstration phase will not be able to take full advantage of Jabil this year, therefore delay to 2013+

4. Need to accelerate outsourced component manufacturing – in-house production has proven ZBM manufacturability, however cost reductions and product quality will be driven via transfer to experienced well-resourced offshore manufacturing facilities

5. Outsource manufacturing to be progressed via a programme of progressive transfer of component and sub-assembly manufacture to selected partners over the next 6/12 months following a review of our existing manufacturing processes

As a consequence RedFlow will:

– Deploy larger demonstration projects in target markets prior to commercial orders

– Focus on system integrators sales channel and strategic relationships

– Scale back Brisbane manufacturing operations significantly and focus on ZBM outsourcing and development

– Fast-track ZBM outsourcing to reach commercial quantity, quality and cost of ZBM battery production asap

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Revised manufacturing plan

The Board has developed a revised manufacturing strategy following a report from Zebulon Solutions LLC, a specialist manufacturing consultant

Key elements are as follows:

1. Offshore production was previously hampered due to continuous product development, resulting in difficulties in producing appropriate process documentation for the manufacturing processes prior to attempting to transfer production to Jabil

2. A comprehensive review is on-going, improving all manufacturing process documentation and process controls, followed by incremental outsourcing of components

3. Experienced Zebulon personnel are working alongside RedFlow to lead specific RFX teams to drive these processes

4. A staggered process transfer of sub-system manufacture and is expected to take 12 months

5. Full outsourced manufacturing to be completed by 2014

6. Key sub-assembly outsourcing to be in place by June 2013, with the first sub-supplier identified who is highly capable and willing to support this manufacturing transfer process with their internal support team

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End users buy ESSs from global SIs

RedFlow

Commercial ZBMs

System Integrators with channels

to market

Commercial electricity storage systems (ESS)

End users

kW to MW scale applications

Utilities Telcos C&Is etc.

ZBMs ESSs

Demo trials

with new System Integrators & end users

data data

RedFlow sells ZBMs to System Integrators (SI) who have channels to

market

These SIs produce Energy Storage Systems (ESS) to

their customer specifications globally

“System Integrator” business model

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RedFlow milestones during the next 12 months

1. The first M-class containerised battery system deployed in support of a large solar PV array at the University of Queensland in Q2 2012

– Completed June 2012

2. An agreement in place to install US or Asia based M-class demonstration system – Discussion with two potential customers underway

3. Agreements in place to develop systems with two major system integrators and customers using RedFlow ZBMs

– Currently in negotiations with four potential system integrators (2 Asian, 1 US & 1 EU based)

4. Generation 3 ZBM prototype to undergo first tests by the end of 2012, as part of ongoing cost down and performance targets

– Expect first prototype to be assembled in July 2012

5. Long-term testing to demonstrate >1000 cycles from the ZBM by the end of 2012 – 900 cycles demonstrated to end June 2012 and continuing (at lower discharge levels)

6. Establish outsourced manufacturing capability for scale deployment and first phase commercial sales – Ongoing discussions with Jabil and intermediate scale overseas manufacturer

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RedFlow Limited Headline Financials

30 June Year End Audited Audited Unaudited3

(AUD ‘000’s) 2010A 2011A 2012F

Income Statement

Revenue from Sale of Goods 1 691 1,777 2,650

Loss before tax 2 (1,060) (7,293) (13,200)

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Notes: 1. Excludes Interest received and other revenue 2. Loss is stated after capitalisation of development costs and amortisation over a 7 year period which is the current accounting policy. This policy is

currently under review by the company audit committee and board of directors due to the current market capitalisation. The review is to ensure full compliance with AASB 138 – Intangible Assets.

3. Figures for 2012 are projections subject to audit and board approval

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RedFlow Limited Headline Financials

Balance Sheet as at 30 June Audited Audited Unaudited3

(AUD ‘000’s) 2010A 2011A 2012F

Assets

Cash 793 9,085 3,400

Other Current Assets 483 2,024 2,100

Total Current Assets 1,276 11,109 5,500

Fixed Assets 334 1,984 2,000

Capitalised Development Costs2 2,337 5,420 9,000

Total Non-Current Assets 2,671 7,404 11,000

Total Assets 3,947 18,513 16,500

Liabilities (824) (2,486) (1,800)

Net Assets 3,123 16,027 14,700

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Notes: 1. Includes Interest received 2. Loss is stated after capitalisation of development costs and amortisation over a 7 year period which is the current accounting policy. This policy is

currently under review by the company audit committee and board of directors due to the current share price. The review is to ensure full compliance with AASB 138 – Intangible Assets.

3. Figures for 2012 are projections subject to audit and board approval. Excludes any impact from capital raising

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RedFlow Limited Headline Financials

Cash Burn Rate per month

– July 2009 to June 2010 - $265k

– July 2010 to June 2011 - $942k

– July 2011 to June 2012 - $1462k

– Forecast July 2012 to Sep 2012 - $890k

– Targeted October 2012 – June 2013 - <$750k

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Monthly Cashflow

Monthly Cashflow 3 Month Average

16: Note: Actual until May 12, June 12 is a projection

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Summary

1. Do RedFlow’s products work?

– 3rd party - Sandia Phase 1 test – (see website)

– Field trials today (USR510, UQ M90, Ausgrid)

– Cumulative experience to date

2. Is development at least as advanced as the main competitor offerings with strong commercial/market acceptance?

– Four multi-billion dollar companies have performed global due diligence on RedFlow’s solutions and we are working with/short listed with all

– vs. Na, LA & LiB – ZBM has the best performance envelope for our targeted applications

3. Do products have a clear path to a competitive pricing point with products being made consistently in mass production?

– Two industries help RedFlow’s ZBM be competitive (the ZBM is a plastic electroplating m/c) – the innovative plastics and power electronics industries

– ... with contribution from advances in contract manufacturing

4. Are RedFlow’s solutions are expected to fulfil all reasonable market requirements?

– 2-6 hour window with daily deep cycling is the target application

– Sticking to what ZBM is suitable for results in a large market for operating envelope

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